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Here’s Why Advertising Agencies Hate Tesla Motors Inc (TSLA)

Tesla Motors Inc (NASDAQ:TSLA)

Tesla Motors Inc was in the news last week after the Freise Brothers made an awesome video ad for the Model S. They depicted the Model S (a representative of EVs) as the last hope of humanity in a wasteland of oil rigs and gas-guzzling cars. A Tesla spokesperson commented on the ad as one of many ads created by Tesla fans and Elon Musk tweeted about it. Many Tesla fans fell in love with the ad and they urged Musk to hire the Freise Brothers – but we all know that Tesla doesn’t spend money on ads.

Tesla Motors Inc (NASDAQ:TSLA)
A frame from Friese Brothers Tesla Commercial. Watch it below.

Tesla Motors doesn’t spend a dime on advertising, the firm doesn’t work with any ad agency, and it only relies on the quality of its cars to fuel the promotion of its brand.  This must be maddening to Ad Agencies but so far they’re just not needed.

While Tesla doesn’t spend a dime on advertising its cars, the firm doesn’t shy away from marketing its brand. This piece seeks to explore the success of Tesla’s marketing strategy and on how the firm is making headway by focusing on marketing instead of advertisements.

Tesla’s latest marketing initiative

Tesla Motors has started a new marketing initiative and the firm is teasing customers with the prospects of winning a Ludicrous P90 Model X and tour of SpaceX. The new marketing initiative is a referral program aimed at increasing the sales of the Model S and also encouraging owners to install home EV chargers. The best part of this new marketing plan is that anybody can win because the winners will be chosen in a draw.

To qualify for the draw to win a Ludicrous P90 Model X and tour of SpaceX, current Model S owners will be give three referral codes through which they can encourage people to buy a Model S. The use of the referral codes provides the new buyers a credit of $1,200 towards the installation of a home EV charger if they buy and take delivery of Model S between February 16 and April 15, 2016.

Here’s how Tesla will reward referrers. Tesla says, “one lucky referrer will win a Ludicrous P90D Model X as well as a tour for four of the SpaceX headquarters in Los Angeles, including travel and accommodations… Five referrers will win a tour for four of the SpaceX headquarters in Los Angeles, including travel and accommodations.”

Tesla has a history of impressive marketing initiatives. In August 2015, Bjorn Nyland, a Model S owner famous for his videos about the car won a Model X after got 10 people to buy the Model S through his referral link. Last month, another Tesla owner known as “Wei70644” received a P90D Model S after he secured 188 orders of the Model S for Tesla. PC Mag notes that Tesla made at least $16M in sales from the efforts of ” alone.

Marketing makes more sense to Tesla Motors than advertising

Tesla has perfected the art of turning its customers into fervent salesmen and saleswomen who persuade the people in their network to buy its cars. Owning an electric car is a relatively new idea for most people and potential buyers are more likely to consider buying an EV if a friend or family member who already owns one persuades them. The fact that Tesla owners stand to win huge prizes when they refer people to the brand also provides more incentive for current owners to become persuasive salespersons.

Tesla doesn’t sell its cars via dealerships because the dealers will only be interested in volume sales and they might not be able to persuade buyers because the buyers know that they are after commissions. However, if someone you know rides a Model S and he makes a passionate case for electric cars over gasoline engines, you’ll be most likely want to listen to him and perhaps schedule a test drive in his car.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.